Crude Oil Price Update – Close Under $62.69 Forms Bearish Reversal Top

U.S. West Texas Intermediate crude oil futures are trading lower on Wednesday, reversing an earlier spike to the upside, after Iran’s rocket attack on American forces in Iraq failed to destroy major energy infrastructure that could have disrupted global crude supply. Traders are now awaiting a press conference by President Trump at 16:00 GMT, where he is expected to provide updates and clarity about the event.

At 16:00 GMT, February WTI crude oil is trading $61.44, down $1.32 or -1.98%.

Traders are saying that President Trump is expected to announce that the United States will not retaliate against the attack.

Adding further to the weakness was a surprise rise in crude oil, gasoline and distillate inventories last week, according to a government report.

The U.S. Energy Information Administration (EIA) said crude inventories rose by 1.2 million barrels in the week-ended January 3 to 431.10 million barrels, compared with analysts’ expectations in a Reuters poll for a 3.6 million-barrel drop.

Crude stocks at the Cushing, Oklahoma, futures delivery hub fell by 821,000 barrels in the last week, EIA said.

Refinery crude runs fell by 386,000 barrels in the last week, EIA said. Refinery utilization rates fell by 1.5 percentage points, in the week.

U.S. gasoline stocks rose by 9.1 million barrels in the week to 251.6 million barrels, the EIA said, compared with expectations in a Reuters poll for a 2.7 million-barrel rise.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $60.63 will change the main trend to down. A move through $65.65 will signal a resumption of the uptrend.

Due to the prolonged move up in terms of price and time, a close below $62.69 will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.

The market is currently trading inside a major retracement zone at $62.05 to $58.91. This zone controls the longer-term direction of the market.

The main range is $50.44 to $65.65. Its retracement zone at $58.05 to $56.25 is an important target zone. It also represents value so look for buyers on a pullback into this zone.

Daily Technical Forecast

Based on the early price action and the current price at $61.44, the direction of the February WTI crude oil market the rest of the session on Wednesday is likely to be determined by trader reaction to the major Fibonacci level at $62.05.

Bearish Scenario

A sustained move under $62.05 will indicate the presence of sellers. If this continues to generate enough downside momentum then look for sellers to go after the main bottom at $60.63.

A trade through $60.63 will change the main trend to down. This could trigger a further break into a potential support cluster at $58.91 to $58.69.

Bullish Scenario

Overtaking $62.05 will signal the return of buyers. Taking out a downtrending Gann angle at $62.30 and recovering an uptrending Gann angle at $62.75 will put crude oil in a bullish position.